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Privatization of Wilmington port appears dead

RANDALL CHASE Associated Press

Posted:
03/07/2013 06:20:43 PM PST

Updated:
03/07/2013 07:39:58 PM PST

WILMINGTON, Del.—Citing hostility from organized labor, energy giant Kinder Morgan said Thursday that it is suspending efforts to work out a lease arrangement with Delaware officials for operating the Port of Wilmington.

The company's decision comes after months of work by the Markell administration to work out a public-private partnership to operate the port, which has received tens of millions of dollars in state subsidies in recent years but is in need of costly repairs.

"This may have been an opportunity for increased jobs as a result of additional capital investment beyond what the state can afford," Gov. Jack Markell said in a prepared statement. "It is unfortunate that the port will not be able to capitalize on that potential opportunity at this time."

Kinder Morgan had proposed investing at least $200 million at the port, including $142 million in lease payments and an upfront payment of $16.5 million. The company also has said it would spend millions more on infrastructure, maintenance and expansion.

But in a letter Thursday to state economic development director Alan Levin, Kinder Morgan said it was concerned that leaders of the local longshoreman's union, which has fought the deal, had become so antagonistic that forging a productive relationship with a future work force would be impossible.

"Simply put, we have choices in terms of where we will invest substantial resources and the current union leadership at your facility does not make Delaware a good choice at this time," wrote Kinder Morgan president John Schlosser, whose Houston-based company operates scores of port and terminals around the country.

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Attempts to reach Levin for comment were not immediately successful.

Schlosser specifically leveled blame at Julius Cephas, president of the International Longshoremen's Association Local 1694-1. Cephas has repeatedly criticized Kinder Morgan in comments to the media and legislators. The state legislature had passed a bill giving it a say on any privatization deal.

Schlosser said that while attacking Kinder Morgan, Cephas repeatedly refused to meet with company officials until last week. When they tried to reschedule another meeting, Cephas said he would bring lawmakers, many of whom are sympathetic to unions, with him to the labor negotiations, a proposal that Kinder Morgan rejected. Schlosser said Cephas then said he would not meet with Kinder Morgan officials until lawmakers sign off on a privatization deal.

"Of course, several members of the General Assembly made it clear in January that they are not likely to approve any such transaction unless we can come to terms with Local 1694," Schlosser wrote. "This puts Kinder Morgan in an impossible situation."

Cephas did not immediately return messages left at the union hall and his home Thursday evening.

Union officials have warned that if Kinder Morgan signs a long-term lease deal with the state, the company will cut jobs at the port and the workers who remain will lose benefits. Lawmakers also have expressed concerns about union jobs at the port and said Kinder Morgan was offering far less than it should to operate the port.

Schlosser noted in his letter Thursday that when it was first invited to Delaware with the support of the longshoremen's union, Kinder Morgan had offered a three-year deal with no reductions in the work force as the starting point for negotiations with union officials.

"We thought this was a significant good-faith gesture, not offered to many in the workforce these days," Schlosser wrote, adding that Kinder Morgan's plans for the port likely would have made it more competitive and resulted in hundreds of new jobs and significantly more capital investment.

"However, none of this is realistic if the local workforce is not productive because a volatile union leader is not even willing to negotiate, let along (sic) agree to a reasonable contract."